Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
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The difference is that when you own a mutual fund they are not tax loss harvesting with respect to every one of its investments. There opportunity to harvest 500 or 1000 stocks for losses on a regular basis generates a lot of losses.
A mutual fund can't pass net realized capital losses annually to shareholders, to offset same-year gains from their other assets, or (usually better) offset their other income up to $3k per MFJ tax unit, or be carried over to subsequent years for such purpose. You have to sell fund shares, representing the whole basket of stocks, to realize a loss - which is less typically available at the whole-basket level.